Tally for CAs in Industry Silver Edition (Single User) Tally Renewal (Auditor Edition) Need Tally for Clients? (Tie-up with us!!!)
Open DEMAT Account with in 24 Hrs and start investing now!
Service Tax »
Open DEMAT Account in 24 hrs
 Digital Service Tax could offer an interim solution Cyber tax conundrum
 Investment instruments that are helpful in saving your tax under Section 80C Income Tax Saving Schemes
 National pension scheme: NPS as a tax-saving tool goes beyond Section 80C
 Mistakes that can delay your income tax refunds
 Waive income tax on Senior Citizens Savings Schemes interest: SBI report
 How to check income tax refund status?
 How faceless assessment has ushered in an era of transparency in tax matters
 How salaried individuals can claim HRA in an income tax return?
 No Service Tax applicable to Salary paid to employees under Secondment Agreement: CESTAT
 Two Days Left For Filing Your Income Tax Return. Here Are Key Points To Remember
 SBI unveils free service for customers to file income tax return ITR 2020 21

GST: Cut the rate, extend coverage
April, 12th 2017

Most goods (nearly 70%) will reportedly attract a goods and services tax rate of 18%. This is welcome. This rate is less than half of the current cumulative burden of indirect taxes on goods. Consumers will gain as most of these taxes will be subsumed under GST, cutting out the cascade of multiple levies that products bear, and lower retail prices. Most services should also attract the 18% rate when all taxes levied on goods and services are collapsed into one.

It is more than the so-called revenue-neutral rate — one that would leave revenues no worse off — considering that the combined tax collections of the Centre and states are about 17% of GDP now. Of the total collections, corporate, personal income and customs fetch about 7 percentage points of GDP, and the taxes that would be subsumed under GST yield about 10% of GDP.

Globally, the average VAT rate is about 16.4%. So, increasing the coverage of GST will make it possible for the Centre and states to lower the rate.

India will have a fourtier GST structure with rates ranging from 5% to 28%. Rates can converge when exemptions are removed and all goods and services are steadily brought under the tax net. It will also declutter the tax system. Regrettably, a large chunk of the economy, which includes real estate, electricity, alcohol and petroleum products, is out of GST.

This breaks the GST chain — wherein manufacturers get credit for the taxes that they pay on inputs — and increases scope for evasion. The GST Council should swiftly bring the excluded items also under GST.

Sensibly, the health ministry wants all tobacco products that include biris (beedis) to attract the highest tariff of 28% and a sin tax component of 15% that will not be eligible for input tax credit. The idea is to generate revenues and penalise a health hazard. Hefty taxes on cigarettes have restrained their use, but increased consumption of tax-evading smuggled cigarettes, besides of other tobacco products, some of them more harmful than cigarettes. The GST Council should just not heed to demands for sector-specific concessions.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2021 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting